Prudential supervision of general insurance stage 2 reforms: Risk and financial management

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Prudential supervision of general insurance stage 2 reforms: Risk and financial management

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Australian Prudential Regulation Authority () (Australian Prudential Regulation Authority)

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Paper provided by Australian Prudential Regulation Authority in its series Policy Discussion Papers with number dp0016.

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Date of creation: 03 May 2005
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Handle: RePEc:apr:aprpdp:dp0016

Note: On 20 November 2003, APRA released a discussion paper entitled Prudential Supervision of General Insurance ? Stage 2 Reforms (the 2003 discussion paper) seeking comments by the end of February 2004. This discussion paper is available on the APRA web site at www.apra.gov.au/policy. The 2003 discussion paper responded to a number of the recommendations made by the HIH Royal Commission in April 2003, which have been supported by the Government and which also re?ect initiatives suggested by APRA in its submission to the Commission in September 2002.

The 2003 discussion paper outlined proposals to:

revise the existing prudential standards and guidance notes in light of experience and market developments; and

increase disclosure about the activities of general insurers (insurers) in order to promote market discipline.

The proposals relating to revisions of prudential standards covered a range of issues such as governance, capital, risk management, reinsurance, audit and actuarial arrangements, outsourcing and business continuity management. The primary objective of the proposals was to further strengthen the regulatory regime applying to insurers in Australia.

APRA received almost 80 submissions in response to the proposals, and met with a number of respondents who wished to present their case directly. In addition, a seminar was hosted jointly by APRA and the Insurance Council of Australia on 10 June 2004 to provide an opportunity for APRA to set out its perspective on the proposals and for the industry to respond.

This discussion paper responds to the issues raised in respect of risk management, reinsurance, audit and actuarial arrangements and outsourcing ? collectively termed risk and financial management. Draft prudential standards incorporating the proposals are being released separately to this paper and are available on the APRA web site at www.apra.gov.au/policy.

In relation to other issues raised in the 2003 discussion paper:

consultation in respect of governance is proceeding separately on a cross-industry basis (refer to www.apra.gov.au/policy) with further proposals to be released shortly;
proposals relating to capital and other issues will be consulted on in coming months;
disclosure requirements for insurers are being reviewed separately, in the context of international developments; and
the proposal to develop a separate standard for run-off insurers will not proceed, given there is little difference between the requirements for insurers now entering into run-off and those applying to other insurers.

APRA proposes to finalise and issue the prudential standards and guidance notes discussed in this paper in January 2006. Written submissions on these proposals should be forwarded via email by 5 August 2005

Mr Greg Brunner
General Manager
Policy Research and Statistics
Australian Prudential Regulation Authority
giregime@apra.gov.au

Contact details of provider:
Postal: 400 George Street, Sydney, NSW 2000, Australia
Phone: +61 (0)2 9210 3000
Fax: +61 (0)2 9210 3022
Web page: http://www.apra.gov.au/

For technical questions regarding this item, or to correct its listing, contact: (Justin Harding).

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This paper has been announced in the following NEP Reports:

NEP-ALL-2007-03-03 (All new papers)
NEP-IAS-2007-03-03 (Insurance Economics)
NEP-REG-2007-03-03 (Regulation)
NEP-RMG-2007-03-03 (Risk Management)

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